Chancellor Rishi Sunak has confirmed that this year’s Autumn Budget will take place on 27 October.
The government hasn’t shared what it plans to announce on the day yet, but speculation abounds as to what the Budget will contain, and several announcements have been made that could be confirmed or expanded upon in the speech.
Here, Which? rounds up what this year’s Autumn Budget could mean for your pocket. We’ll update this story with any future developments.
The big changes we already know about
It’s possible that the year’s most significant financial announcements have already taken place.
In September, the government announced a 1.25 percentage point increase to National Insurance from April 2022. The money raised will go towards increasing funding for the NHS and fixing the social care crisis. Use our National Insurance calculator to find out how much you’ll pay.
The government has also confirmed that the state pension ‘triple lock’ will be suspended for a year. The triple lock guarantees that the state pension will increase every year by inflation, average wage earnings growth, or 2.5% (whichever is highest). September
But the effects of the furlough scheme left earnings growth unusually high at 8%, so that element of the lock has been dropped.
Earlier this month, the government announced the £500m Household Support Fund for councils to distribute to help people in England pay for daily needs through the winter.
And this week, £5,000 grants to replace gas boilers with low-carbon heat pumps were announced.
- Find out more: how much state pension will I get?
State pension increase
From April 2022, millions of state pensioners will receive a 3.1% pay rise, representing up to £288.60 over the year for those that receive the new state pension.
This wouldn’t need to be mentioned in the Budget, since it has already been confirmed under the current ‘double lock’ system, but Sunak may still choose to confirm it at the dispatch box.
However, as mentioned above, if the triple lock hadn’t been suspended, this rise could have been bigger.
- Find out more: how much will the state pension pay in 2022?
Alcohol tax shake-up
According to reports in the Sun, the Chancellor could reform alcohol duty in the Budget, taxing wine at a lower rate, but cider at a higher rate, among other possible changes.
Alcohol duty is quite complicated at the moment. You can read a bit more about how it works in the story we published after the last Budget, when Sunak froze the tax for the second year in a row.
- Find out more: alcohol duties frozen in March Budget
End to public sector pay freeze
The Guardian reports that the Chancellor’s ‘pause’ on public sector pay rises will be lifted in April.
Imposed last November, Sunak said the freeze was appropriate since many in the private sector were being furloughed or becoming unemployed.
However, while the freeze is expected to end, unions have warned that government departments will need to be given increased budgets in order to fund pay rises. We may find out on Budget day whether this point will be taken on board.
Energy bills VAT cut
We may see some measures aiming to address the ongoing cost-of-living crisis that serves as this Budget’s backdrop.
A potential cut to the 5% VAT rate for household energy bills is favoured by some Conservative MPs, according to the Financial Times.
This approach has its critics, though, with some warning that it would in effect be subsidising fossil fuels on the eve of the Cop26 climate summit. Others have said Sunak’s focus on reigning in public spending would make a move like this – which would lose revenue for the Treasury – unlikely.
Minimum wage rise
It was rumoured in the run-up to Boris Johnson’s Conservative party conference speech that he would announce an increase to the minimum wage for workers over the age of 23, known as the National Living Wage.
The announcement failed to materialise at the conference, leaving the distinct possibility that it’s being saved for the Autumn Budget later this month.
The Times reported that the Prime Minister would raise the wage to £9.42 per hour, up from its current rate of £8.91. This 5.7% increase would equate to £928 a year before tax for people working 35 hour weeks.
The move would see Boris Johnson accept the recommendations of the independent Low Pay Commission, which will send its proposals to the government this month.
The National Living Wage is separate from the real Living Wage, calculated by the Living Wage Foundation (LWF) based on the cost of living. More than 7,000 UK businesses have voluntarily pledged to pay this, according to the LWF.
Raising the National Living Wage to £9.42 would bring it very close to the LWF’s current recommendation of £9.50 an hour. However, the real Living Wage is recommended for everyone over the age of 18. There is no word yet on whether Boris Johnson will increase the government’s Minimum Wage for under 23s.
The real Living Wage also has a separate, higher rate of £10.85 for London due to the higher cost of living in the English capital.
Cladding scandal support
Reports emerged earlier this month that new housing secretary Michael Gove is considering a range of options to help the thousands of flat owners facing unaffordable bills to make their homes safe.
The Guardian reported that Michael Gove is exploring a government-backed insurance scheme for at-risk buildings, which would aim to address skyrocketing buildings insurance bills leaseholders are facing, as highlighted by Which? research earlier this year.
The Department of Levelling Up, Housing and Communities told Which?: ‘As a new minister in a new department, the Secretary of State is looking afresh at our work in this area to ensure we are doing everything we can to protect and support leaseholders.’
Whether we’ll hear news on these developments from the Chancellor, or in a separate speech from Michael Gove, is a key question. But there’s a chance an update could make its way into the Budget.
- Find out more: the cladding scandal’s mental health toll revealed
Listen: leaseholders and campaigners share their stories at a recent cladding scandal protest on the Which? Money Podcast.
More tax rises to come?
In a speech to the Conservative party conference, Chancellor Rishi Sunak indicated that he would use tax rises, rather than borrowing, to fund future spending pledges. But he was not specific about how or when this would happen.
In the March 2021 Budget, the Chancellor announced that several tax thresholds will be frozen until 2026 to help fix public finances in the wake of the coronavirus crisis.
These include the capital gains tax (CGT) allowance – the amount of profit you can make when selling certain assets before you need to pay tax. But there is speculation that further changes to CGT rules are about to be made.
Chancellor Rishi Sunak ordered an urgent review from the Office of Tax Simplification (OTS) in July 2020.
Proposals made by the OTS included aligning CGT more closely with income tax rates and reducing the CGT allowance from £12,300 to between £2,000 and £4,000.
The Autumn Budget could be the moment that the Chancellor confirms whether any of these proposals will be adopted.
- Find out more: how to reduce your capital gains tax bill
The Budget will take place shortly before COP26, the international climate summit, begins in Glasgow. The government will be keen to prove its green credentials going into the summit, so you can expect at least part of the Budget to be focused on green measures.
In the March 2021 Budget, the Chancellor launched NS&I green savings bonds, although according to NS&I’s website these won’t be available until ‘later this year’.
The Autumn Budget could include an update on green savings bonds, and possibly a replacement for the Green Homes Grant to aid sustainable renovation. But with COP26 on the horizon and the climate crisis escalating, we may see something bolder.
The government has already unveiled plans to give households £5,000 grants to replace gas boilers with low-carbon heat pumps. Although experts have said the grants would fund just 90,000 pumps over three years, a tiny fraction of the 25 million homes in the UK with gas boilers.
- Find out more: what does COP26 mean for you?
Universal Credit uplift replacement
Despite warnings that it would plunge many into poverty, Prime Minister Boris Johnson went ahead with plans to cut Universal Credit by £20 a week earlier this month.
The charity Mental Health UK warned making the ‘catastrophic cut’ to Universal Credit could cause mental health problems to spiral.
The Times reported that Conservative party colleagues are urging Sunak to increase benefits to ‘cushion the blow’ of reducing Universal Credit. Business Secretary Kwasi Kwarteng told the BBC that the end of the temporary £20 uplift, alongside rising energy prices, could lead many to face a ‘very difficult winter’.
The £20-a-week uplift ended on 6 October, three weeks before the Budget. So it’s possible that a replacement will be announced then.
The Household Support Fund, mentioned above, may be intended as a replacement. But charities have warned that this alone won’t be enough.
- Find out more: Universal Credit explained
Shake-up to student loan repayment threshold
Chancellor Rishi Sunak is reportedly planning to overhaul the student finance system – possibly as part of his spending review.
According to the FT, the changes will solve the problem of the taxpayer ‘footing too great a burden’ of funding university courses.
The government reportedly plans to reduce the earnings threshold at which students must begin to repay their student loans. Currently, students only begin to repay what they’ve borrowed when their earnings reach £27,295.
Two reviews into what the lower threshold should be, have suggested £23,000 and £20,000, but a decision has not yet been announced.
The Institute for Fiscal Studies has said reducing the graduate earnings threshold to £23,000 would save the Treasury just under £2bn a year.
However, this move would add significant costs to new and existing graduates, who will already be hit by increased National Insurance contributions from April 2022. New graduates will have to start repaying their student loans while on lower salaries, while existing graduates will see their existing repayments rise.
This story was first published on 24 September 2021, shortly after the Chancellor announced the date for the Autumn Budget. It was last updated on 20 October 2021, with details of further rumours that might feature in the Budget announcement.